What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-02-10 compared with 2024-08-08 · 232 added, 231 removed, 435 unchanged (52% of the section changed)

3 unchanged sentences

(in thousands, except per share amounts)

June 30, 2024 September 30, 2023

December 31, 2024 September 30, 2024

Current assets:

Cash, cash equivalents and restricted cash $ 53,889 $ 102,685

Accounts receivable 2,500 —

Available-for-sale securities, at fair value 499,046 578,276

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Lease liabilities 6,560 6,342

Deferred revenue — 866

Credit facility 1,625 —

Other liabilities 440 432

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Liability related to the sale of future royalties 346,776 341,361

Credit facility, net of current portion 407,789 393,183

Total long-term liabilities 863,861 845,571

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Additional paid-in capital 1,846,842 1,806,000

Accumulated other comprehensive loss ( 987 ) ( 3,222 )

Accumulated other comprehensive income 4,137 4,750

Accumulated deficit ( 1,798,608 ) ( 1,625,523 )

8 unchanged sentences

(in thousands, except per share amounts)

Three Months Ended June 30, Nine Months Ended June 30,

2024 2023 2024 2023

Three Months Ended December 31,

Revenue $ 2,500 $ 3,551

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Other, net 341 421

Total other income (expense) 2,164 ( 680 ) ( 785 ) ( 829 )

Loss before income tax expense (benefit) and noncontrolling interest ( 173,977 ) ( 103,383 ) ( 439,662 ) ( 97,501 )

Total other expense ( 13,703 ) ( 2,144 )

Loss before income tax expense and noncontrolling interest ( 175,115 ) ( 138,689 )

Income tax expense (benefit) 103 ( 3,313 )

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Other comprehensive loss, net of tax:

Change in unrealized losses on available-for-sale securities 249 — 2,374 —

Unrealized (losses) gains on available-for-sale securities ( 507 ) 1,909

Foreign currency translation adjustments ( 106 ) 58

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Common stock - restricted stock units vesting 209 — — — — — —

Pre-funded warrants 917 1 24,999 — — — 25,000

Foreign currency translation adjustments — — — ( 106 ) — — ( 106 )

Change in unrealized losses on available-for-sale securities — — — 1,909 — — 1,909

Unrealized gains on available-for-sale securities — — — ( 507 ) — — ( 507 )

Net loss — — — — ( 173,085 ) ( 2,133 ) ( 175,218 )

Balance at December 31, 2024 125,572 $ 218 $ 1,846,842 $ 4,137 $ ( 1,798,608 ) $ 3,486 $ 56,075

Stock-based compensation — — 17,750 — — — 17,750

Exercise of stock options 120 — 1,512 — — — 1,512

Common stock - restricted stock units vesting 723 1 ( 1 ) — — — —

Common stock issued, net of offering costs 15,790 16 429,249 — — — 429,265

Foreign currency translation adjustments — — — ( 56 ) — — ( 56 )

Change in unrealized losses on available-for-sale securities — — — 216 — — 216

Net loss — — — — ( 125,300 ) ( 1,696 ) ( 126,996 )

Balance at March 31, 2024 124,133 $ 217 $ 1,768,866 $ ( 1,095 ) $ ( 1,284,194 ) $ 11,611 $ 495,405

Stock-based compensation — — 17,050 — — — 17,050

Exercise of stock options 43 — 388 — — — 388

Common stock - restricted stock units vesting 51 — — — — — —

Foreign currency translation adjustments — — ( 141 ) — — ( 141 )

Change in unrealized losses on available-for-sale securities — — — 249 — — 249

Net loss — — — — ( 170,793 ) ( 3,184 ) ( 173,977 )

Balance at June 30, 2024 124,227 $ 217 $ 1,786,304 $ ( 987 ) $ ( 1,454,987 ) $ 8,427 $ 338,974

Amount ($) Additional

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Foreign currency translation adjustments — — — 58 — — 58

Unrealized losses on available-for-sale securities — — — 1,909 — — 1,909

Net loss — — — — ( 132,864 ) ( 2,512 ) ( 135,376 )

Balance at December 31, 2023 107,500 $ 200 $ 1,320,356 $ ( 1,255 ) $ ( 1,158,894 ) $ 13,307 $ 173,714

Stock-based compensation — — 20,612 — — — 20,612

Exercise of stock options 64 — 520 — — — 520

Common stock - restricted stock units vesting 665 — — — — — —

Foreign currency translation adjustments — — — ( 74 ) — — ( 74 )

— — — — 48,675 ( 999 ) 47,676

Balance at March 31, 2023 106,869 $ 199 $ 1,260,310 $ ( 332 ) $ ( 813,405 ) $ 18,334 $ 465,106

Stock-based compensation — — 19,947 — — — 19,947

Exercise of stock options 198 — 1,136 — — — 1,136

Common stock - restricted stock units vesting 35 — — — — — —

Foreign currency translation adjustments — — — ( 79 ) — — ( 79 )

Net loss — — — — ( 102,946 ) ( 1,179 ) ( 104,125 )

Balance at June 30, 2023 107,102 $ 199 $ 1,281,393 $ ( 411 ) $ ( 916,351 ) $ 17,155 $ 381,985

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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(in thousands)

Nine Months Ended June 30,

Three Months Ended December 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

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Depreciation and amortization 5,235 4,263

Amortization (accretion) of note premiums/discounts 7,886 ( 1,030 )

Realized gain on investments ( 80 ) —

Accretion of note premiums/discounts ( 5,704 ) ( 835 )

Realized loss on investments — ( 80 )

Non-cash interest expense on liability related to the sale of future royalties 5,415 5,367

Non-cash interest expense on credit facility 16,231 —

Changes in operating assets and liabilities:

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Operating lease, net ( 1,128 ) 3,796

Other 1,402 —

Net cash used in operating activities ( 146,272 ) ( 117,840 )

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Proceeds from sales and maturities of investments 118,175 133,495

Net cash used in investing activities ( 197,149 ) ( 126,664 )

Net cash provided by investing activities 76,910 64,839

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from the exercises of stock options 634 267

Proceeds from the issuance of common stock, net of offering costs 429,265 —

Proceeds from the sale of future royalties 50,000 250,000

Proceeds from the issuance of pre-funded warrants 25,000 —

Payments of debt issuance cost ( 5,000 ) —

Net cash provided by financing activities 20,634 267

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Therapeutic Area Name Stage Product Rights

Cardiometabolic plozasiran (ARO-APOC3)

zodasiran (ARO-ANG3)

Phase 2b Arrowhead

Cardiometabolic plozasiran Phase 3

zodasiran Phase 2b Arrowhead

Phase 3 Amgen

Pulmonary ARO-RAGE Phase 1/2a

ARO-MUC5AC Phase 1/2a Arrowhead

ARO-MMP7 Phase 1/2a

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Phase 3 Takeda and Arrowhead

daplusiran/tomligisiran (GSK5637608, formerly JNJ-3989)

daplusiran/tomligisiran Phase 2 GSK

ARO-PNPLA3 Phase 1

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ARO-CFB Phase 1/2a Arrowhead

ARO-INHBE Phase 1/2a Arrowhead

ARO-DUX4 Phase 1/2a Arrowhead

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Central Nervous System (CNS)

Various Pre-Clinical Arrowhead

ARO-ATXN2 Phase 1/2a Arrowhead

The Company operates lab facilities in California and Wisconsin, where its research and development activities, including the development of RNAi therapeutics, take place.

The Company’s principal executive offices are located in Pasadena, California.

Thus far in fiscal 2024, the Company has continued to develop and advance its pipeline and partnered candidates.

During the first quarter of fiscal 2025, the Company continued to develop and advance its pipeline and partnered candidates.

Several key recent developments include:

• Announced plans to advance investigational plozasiran into a Phase 3 cardiovascular outcomes trial called CAPITAN, which is designed to enroll patients with mixed hyperlipidemia and residual risk of atherosclerotic cardiovascular disease;

• Announced successful top-line results from the pivotal Phase 3 PALISADE study of investigational plozasiran in patients with familial chylomicronemia syndrome (FCS).

The Company highlighted recent data for its cardiometabolic pipeline at its June 25, 2024, Cardiometabolic event;

• Presented preclinical data on ARO-INHBE for the treatment of obesity and metabolic diseases at the American Diabetes Association 84 th Scientific Sessions.

INHBE small interfering RNA (siRNA) administration resulted in multiple promising findings including:

(1) 95% reduction in INHBE mRNA expression, (2) 19% suppression of body weight compared to saline controls, (3) 26% loss of fat mass, and (4) preservation of lean mass;

• Announced results from the Phase 2b double blind, randomized ARCHES-2 study of investigational zodasiran in patients with mixed hyperlipidemia;

• Announced that new interim clinical data on ARO-RAGE achieves high level of gene knockdown in patients with asthma;

• Completed enrollment in Amgen’s Phase 3 OCEAN(a) - outcome trial of olpasiran, triggering a $ 50.0 million milestone payment to the Company, which was paid in the third quarter of fiscal 2024;

• Presented final data from the double-blind treatment period of the Company’s Phase 2 SHASTA-2 study of investigational plozasiran in patients with severe Hypertriglyceridemia.

Results from the SHASTA-2 study showed dramatic, consistent, and sustained reductions in Apolipoprotein C-III (APOC3) and triglycerides and improvement in multiple atherogenic lipoprotein levels;

• Announced an Expanded Access Program (“EAP”) to make investigational plozasiran available outside of a clinical trial for qualifying patients with FCS;

• Initiated a Phase 1/2a clinical trial of ARO-DM1, being developed as a potential treatment for type 1 myotonic dystrophy (DM1), the most common adult-onset muscular dystrophy;

• Filed an application for clearance to initiate a Phase 1/2a clinical trial of ARO-CFB, being developed as a potential treatment for complement mediated renal disease;

• Entered into an Amended and Restated License Agreement with GSK, pursuant to which GSK received a worldwide, exclusive license to develop and commercialize daplusiran/tomligisiran (GSK5637608, formerly JNJ-3989).

Daplusiran/tomligisiran had previously been licensed to Janssen Pharmaceuticals, Inc.

• Submitted a New Drug Application (NDA) to the U.S.

Food and Drug Administration (FDA) on November 16, 2024, which was accepted for filing on January 17, 2025.

The FDA provided a Prescription Drug User Fee Act (PDUFA) action date of November 18, 2025, and indicated it is not currently planning to hold an advisory committee meeting;

• Entered into a global and collaboration agreement with Sarepta Therapeutics, Inc.

The Company received $ 325.0 million as an equity investment on February 7, 2025 and will receive $ 500.0 million as an upfront payment during the second quarter of fiscal 2025.

The Company will also receive $ 250.0 million to be paid in equal installments over five years and is eligible to receive an additional $ 300.0 million in near-term payments.

Additionally, the Company is eligible to receive royalties on commercial sales and up to approximately $ 10.0 billion in future potential milestone payments;

• GSK dosed the fifth patient in a Phase 2 trial in December 2024, triggering a $ 2.5 million milestone payment to the Company which was paid in the second quarter of fiscal 2025;

• Announced that the Company has dosed the first subjects in a Phase 1/2a clinical trial of ARO-INHBE;

• Presented interim results from a Phase 1/2a clinical study of ARO-CFB at the 8th Complement-Based Drug

Development Summit.

The study resulted in multiple promising findings including:

(1) ARO-CFO led to dose dependent reductions in circulating CFB protein by up to 90% with greater than 3 months duration, (2) single and multiple doses of ARO-CFB led to near complete inhibition of alternative pathway activity based on Wieslab AP, and (3) single and multiple doses of ARO-CFB led to near complete inhibition of alternative pathway hemolytic activity, measured by AH50;

• Filed a request for regulatory clearance to initiate Phase 1/2a clinical trial of ARO-ALK7, which is being developed as a potential treatment for obesity.

Consolidation and Basis of Presentation

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and its subsidiaries (wholly-owned subsidiaries and a variable interest entity for which the Company is the primary beneficiary).

Subsidiaries refer to Arrowhead Madison, Inc., Visirna Therapeutics, Inc.

(“Visirna”), and Arrowhead Australia Pty Ltd.

Subsidiaries refer to Arrowhead Madison, Inc., Arrowhead Australia Pty Ltd., Arrowhead Pharmaceuticals Ireland Limited, Arrowhead Pharmaceuticals NZ Limited and Visirna Therapeutics, Inc.

For subsidiaries in which the Company owns or is exposed to less than 100% of the economics, the Company records net loss attributable to noncontrolling interests in its consolidated statements of operations equal to the percentage of the economic or ownership interests retained in such entity by the respective noncontrolling party.

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The financial data of the Company included herein are unaudited.

In the opinion of management, all material adjustments of a normal recurring nature have been made to present fairly the Company’s financial position at June 30, 2024 and the results of operations and cash flows for the periods presented.

In the opinion of management, all material adjustments of a normal recurring nature have been made to present fairly the Company’s financial position as of December 31, 2024 and the results of operations and cash flows for the periods presented.

All intercompany transactions and balances have been eliminated.

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Readers are urged to review the Company’s Annual Report on Form 10-K for the year ended September 30, 2024 for more complete descriptions and discussions.

Operating results and cash flows for the nine months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2024.

The Company’s primary sources of financing have been through the sale of its equity securities, revenue from its licensing and collaboration agreements and the sale of certain future royalties.

Research and development activities have required significant capital investment since the Company’s inception and are expected to continue to require significant cash expenditure in the future, particularly as the Company’s pipeline of drug candidates and its headcount have both expanded.

Additionally, significant capital investment will be required as the Company’s pipeline matures into later stage clinical trials.

As of June 30, 2024, the Company had $ 69.4 million in cash, cash equivalents and restricted cash ($ 2.2 million in restricted cash) and $ 367.3 million in available-for-sale securities to fund operations.

During the nine months ended June 30, 2024, the Company’s cash, cash equivalents and restricted cash and investments balance increased by $ 33.0 million which was primarily due to the net proceeds of $ 429.3 million from the underwritten offering in January 2024 discussed below, offset by ongoing expenses related to the Company’s research and development programs, general and administrative expenses and capital expenditures.

On January 2, 2024, the Company entered into an underwriting agreement with Jefferies LLC, BofA Securities, Inc.,

and Cowen and Company, LLC, as representatives of the several underwriters.

The Company issued 15,790,000 shares of common stock at a price of $ 28.50 per share.

The aggregate purchase price paid by investors was $ 450.0 million and the Company received net proceeds of $ 429.3 million after deducting advisory fees and offering expenses.

Operating results and cash flows for the three months ended December 31, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2025.

The Company’s primary sources of financing have been through the sale of its equity securities, credit facility, revenue from its licensing and collaboration agreements and the sale of certain future royalties.

Research and development activities have required significant investment since the Company’s inception and are expected to continue to require significant cash expenditure in the future, particularly as the Company’s pipeline of drug candidates and its headcount have both expanded.

Additionally, significant investment will be required as the Company’s pipeline matures into later stage clinical trials, including commercialization efforts.

As of December 31, 2024, the Company had $ 53.9 million in cash, cash equivalents and restricted cash ($ 2.1 million in restricted cash) and $ 499.0 million in available-for-sale securities to fund operations.

During the three months ended December 31, 2024, the Company’s cash, cash equivalents and restricted cash and investments balance decreased by $ 128.0 million, which was primarily due to ongoing expenses related to the Company’s research and development programs, general and administrative expenses, and capital expenditures, offset by proceeds of $ 25.0 million from the sale of pre-funded warrants.

In total, the Company is eligible to receive up to $ 14.1 billion in developmental, regulatory and sales milestones, and may receive various royalties on net sales from its licensing and collaboration agreements, subject to the terms and conditions of those agreements.

The revenue recognition for these collaboration agreements is discussed further in Note 2.

Summary of Significant Accounting Policies

There have been no changes to the significant accounting policies disclosed in the Company’s most recent Annual Report on Form 10-K for the fiscal year ended September 30, 2024.

Uncertainty in Income Taxes

The Company recorded an income tax benefit of $ 3.3 million and expense of $ 0.8 million for the nine months ended June 30, 2024 and 2023, respectively.

The income tax benefit is primarily due to the discrete change in the Company’s uncertain tax positions related to the statute of limitation expiration.

Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-09, Income Taxes (Topic 740):

In January 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses, in November 2024, and ASU 2025-01, Clarifying the Effective Date .

updates require entities to provide disaggregated disclosure of income statement expenses.

The ASUs do not affect the expense captions presented on the face of the income statement but instead require the disaggregation of certain expense captions into specified categories within the footnotes to the financial statements.

The ASUs will become effective for the Company beginning October 1, 2027, and is not expected to have a material impact on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , to improve its income tax disclosure requirements.

Under the guidance, entities must annually (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold.

This guidance will become effective for the Company beginning on October 1, 2025.

The Company does not expect any material impact on its consolidated financial statements and related disclosures resulting from applying this ASU.

This ASU will become effective for the Company beginning October 1, 2025, and is not expected to have a material impact on its consolidated financial statements and related disclosures.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which is intended to improve reportable segment disclosure requirements, primarily through additional disclosures about significant segment expenses.

The guidance requires public companies with a single reportable segment to provide all disclosures required under ASC 280.

In addition, the guidance requires public companies to include in interim reports all disclosures related to a reportable segment’s profit or loss and assets that are currently required in annual reports.

The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The amendments should be applied retrospectively to all prior periods presented in the financial statements.

The Company does not expect any material impact on its consolidated financial statements and related disclosures resulting from applying this ASU.

This ASU requires public companies with a single reportable segment to provide all disclosures required under ASC 280.

In addition, this ASU requires public companies to include in interim reports all disclosures related to a reportable segment’s profit or loss and assets that are currently required in annual reports.

While the ASU implements further segment disclosure requirements, it does not change how an entity identifies its operating or reportable segments and it will have no impact on the Company’s consolidated financial condition, results of operations or cash flows.

This ASU is applicable to the Company’s Annual Report on Form 10-K for the fiscal year ending September 30, 2025, and subsequent interim periods.

Early adoption is permitted and the amendments must be applied retrospectively to all prior periods presented.

COLLABORATION AND LICENSE AGREEMENTS

The following table provides a summary of revenue recognized:

Three Months Ended June 30, Nine Months Ended June 30,

2024 2023 2024 2023

Three Months Ended December 31,

(in thousands)

GSK $ 2,500 $ 2,685

Horizon — 1,539 — 23,206

Takeda — 14,009 866 146,477

Janssen — — — 355

Amgen — — — 25,000

Total $ 2,500 $ 3,551

The following table summarizes the balance of receivables and contract liabilities related to the Company’s

collaboration and license agreements:

June 30, 2024 September 30, 2023

The following table summarizes the balance of receivables and contract liabilities related to the Company’s collaboration and license agreements:

December 31, 2024 September 30, 2024

(in thousands)

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GSK is wholly responsible for all clinical development and commercialization of GSK-4532990 in its territory.

GSK dosed the first patient in a Phase 2b trial in March 2023 and paid a $ 30.0 million milestone payment to the Company in the third quarter of fiscal 2023.

The Company has completed its performance obligation related to this agreement, and the upfront payment of $ 120.0 million was fully recognized in the year ended September 30, 2022.

Further, GSK dosed the first patient in a Phase 2b trial in March 2023 and paid a $ 30.0 million milestone payment to the Company in the third quarter of fiscal 2023.

The Company is eligible for an additional payment of $ 100.0 million upon achieving the first patient dosed in a Phase 3 trial.

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On December 11, 2023, the Company entered into an Amended and Restated License Agreement with GSK (the “GSK-HBV Agreement”) pursuant to which GSK received a worldwide, exclusive license to develop and commercialize daplusiran/tomligisiran (GSK5637608, formerly JNJ-3989), the Company’s third-generation subcutaneously administered RNAi therapeutic candidate being developed as a potential therapy for patients with chronic hepatitis B virus infection.

GSK5637608 had previously been licensed to Janssen in October 2018.

Under the terms of the GSK-HBV Agreement, the Company received $ 2.7 million in December 2023, upon signing the amended GSK-HBV Agreement.

Further, GSK dosed the fifth patient in a Phase 2 trial in December 2024, triggering a $ 2.5 million milestone payment to the Company which was paid in the second quarter of fiscal 2025.

The Company is eligible to receive up to $ 830.0 million in development and sales milestone payments under the GSK-HBV Agreement.

There were no contract assets and liabilities recorded as of June 30, 2024.

As of December 31, 2024, the Company recorded $ 2.5 million in accounts receivable and no liabilities.

Horizon Therapeutics Ireland DAC (“Horizon”)

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Under the terms of the Horizon License Agreement, Horizon received a worldwide exclusive license for HZN-457, a clinical-stage medicine being developed by Horizon as a potential treatment for people with uncontrolled gout.

At the inception of the Horizon License Agreement, the Company identified one distinct performance obligation.

The Company determined that the key deliverables included the license and certain R&D services, including the Company’s responsibilities to conduct all activities through the preclinical stages of development of HZN-457 (the “Horizon R&D Services”).

The Company received a $ 40.0 million upfront payment in July 2021.

Revenue was recognized on a straight-line basis over the timeframe for completing the Horizon R&D Services, concluding in the first quarter of 2023.

Further, the Company received an additional $ 15.0 million upon Horizon’s initiation of a Phase 1 clinical trial in January 2023.

On October 6, 2023, Amgen completed its acquisition of Horizon and subsequently notified the Company of Amgen’s intent to terminate the HZN-457 license.

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Within the United States, fazirsiran, if approved, will be co-commercialized under a 50/50 profit sharing structure.

Outside the United States, Takeda received an exclusive license to commercialize fazirsiran and will lead the global commercialization strategy, while the Company will be eligible to receive tiered royalties of 20 % to 25 % on net

At the inception of the Takeda License Agreement, the Company identified one distinct performance obligation.

The Company determined that the key deliverables included the license and certain R&D services including the Company’s responsibilities to complete the initial portion of the SEQUOIA study, to complete the ongoing Phase 2 AROAAT2002 study and to ensure certain manufacturing of fazirsiran drug product is completed and delivered to Takeda (the “Takeda R&D Services”).

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The Company allocated the total $ 300.0 million initial transaction price to its one distinct performance obligation for the fazirsiran license and the associated Takeda R&D Services.

Revenue was recognized using the input method (based on actual patient visits completed versus total estimated visits completed for the ongoing SEQUOIA and AROAAT2002 clinical studies).

The Phase 2 study visits for patients in the SEQUOIA and AROAAT2002 studies concluded by December 31, 2023, and the Company has substantially completed its performance obligation under the Takeda License Agreement.

The Company has substantially completed its performance obligation under the Takeda License Agreement by December 31, 2023.

As such, all revenue has been fully recognized as of December 31, 2023.

There were no further deferred revenue and contract liabilities as of June 30, 2024 .

The Company recorded $ 21.3 million as accrued expenses as of June 30, 2024 that was primarily driven by co-development and co-commercialization activities.

There were no further deferred revenue and contract liabilities as of December 31, 2024.

The Company recorded $ 33.6 million as accrued expenses as of December 31, 2024 that was primarily driven by co-development and co-commercialization activities.

Janssen Pharmaceuticals, Inc.

On April 7, 2023, Janssen voluntarily terminated its collaboration agreement with the Company and the Company regained full rights to ARO-PNPLA3, formerly called JNJ-75220795.

ARO-PNPLA3 is in Phase 1 clinical trials, which are now being developed by the Company.

Further, on December 11, 2023, the Company entered into the GSK-HBV Agreement, as discussed above, pursuant to which GSK received an exclusive license for daplusiran/tomligisiran (GSK5637608, formerly JNJ-3989).

Daplusiran/tomligisiran had previously been licensed to Janssen in October 2018.

ARO-PNPLA3 is in Phase 1 clinical trials, which are

now being developed by the Company.

Further, on December 11, 2023, the Company entered into the GSK-HBV Agreement, as discussed above, pursuant to which GSK received an exclusive license for JNJ-3989 (formerly ARO-HBV).

JNJ-3989 had previously been licensed to Janssen in October 2018.

In September 2016, Amgen and the Company entered into two collaboration and license agreements and a common stock purchase agreement.

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Under the Olpasiran Agreement, Amgen is wholly responsible for clinical development and commercialization.

Under the Olpasiran Agreement, the Company has received $ 35.0 million in upfront payments and $ 21.5 million in the form of an equity investment by Amgen in the Company’s common stock.

Further, the Company received an additional $ 55.0 million in milestone payments;

$ 10.0 million upon Amgen’s initiation of a Phase 1 study in September 2018, $ 20.0 million upon its initiation of a Phase 2 clinical study in July 2020, and $ 25.0 million upon its first subject enrollment in a Phase 3 trial in December 2022.

The Company has substantially completed its performance obligations under the Olpasiran Agreement.

There were no contract assets and liabilities recorded as of June 30, 2024.

There were no contract assets and liabilities recorded as of December 31, 2024.

In November 2022, Royalty Pharma Investments 2019 ICAV (“Royalty Pharma”) and the Company entered into a Royalty Purchase Agreement with Royalty Pharma (the “Royalty Pharma Agreement”).

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The Company remains eligible to receive up to an additional $ 485.0 million in remaining development, regulatory and sales milestone payments payable from Amgen and Royalty Pharma.

Visirna Therapeutics, Inc.

In April 2022, the Company and Visirna, its subsidiary, entered into a License Agreement (the “Visirna License Agreement”), pursuant to which Visirna received an exclusive license to develop, manufacture and commercialize four of the Company’s RNAi-based investigational cardiometabolic medicines in Greater China (including the People’s Republic of China, Hong Kong, Macau and Taiwan).

The Company also performs manufacturing and development work pursuant to a Clinical Supply Agreement between the parties contemplated by the Visirna License Agreement.

The Company received $ 0.1 million and $ 0.9 million as consideration for this manufacturing and development work for the nine months ended June 30, 2024 and 2023, respectively.

There were no contract assets and liabilities recorded as of June 30, 2024.

Sarepta Therapeutics, Inc.

( “Sarepta” )

On November 25, 2024, the Company entered into an Exclusive License and Collaboration Agreement (the “Sarepta Collaboration Agreement”) with Sarepta for the co-development and commercialization of multiple clinical and preclinical programs in rare, genetic diseases of the muscle, central nervous system, and lungs.

Under the Sarepta Collaboration Agreement, Sarepta received an exclusive worldwide license to the Company’s ARO-DUX4, ARO-DM1, ARO-MMP7, and ARO-ATXN2 clinical stage programs.

Sarepta also received an exclusive sublicensable worldwide license to the Company’s ARO-HTT, ARO-ATXN1, and ARO-ATXN3 preclinical stage programs.

Further, Sarepta may select up to six gene targets for which the Company will perform discovery, optimization and preclinical development activities to identify RNAi compounds against each selected target.

Upon completion of the Company’s preclinical activities, Sarepta will receive an exclusive license to the Company’s intellectual property rights to exploit those compounds and be wholly responsible for clinical development and commercialization of each compound.

Under the terms of the Sarepta Collaboration Agreement, together with the Stock Purchase Agreement (the "Stock Purchase Agreement") the Company entered into with an affiliate of Sarepta (See Note 6), the Company expects to receive $ 500.0 million as an upfront payment under the Collaboration Agreement, $ 325.0 million in the form of an equity investment under the Stock Purchase Agreement, and $ 250.0 million to be paid in annual installments of $ 50.0 million over 5 years.

The Company is also eligible to receive $ 300.0 million in near-term payments associated with the continued enrollment of certain cohorts of a Phase 1/2 study.

Further, for each of the 13 programs, the Company is eligible to receive development milestone payments between $ 110.0 million and $ 180.0 million per program and sales milestone payments between $ 500.0 million and $ 700.0 million per program, subject to the terms and conditions of the Sarepta Collaboration Agreement.

The Company is also eligible to receive tiered royalties on net sales of licensed products of up to the low double digits.

BALANCE SHEET ACCOUNTS

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The following table summarizes the Company’s major classes of property, plant and equipment:

June 30, 2024 September 30, 2023

December 31, 2024 September 30, 2024

(in thousands)

Land $ 2,996 $ 2,996

Building 75,868 —

Buildings 238,775 75,988

Research equipment 68,868 65,353

Manufacturing equipment 2,574 —

Furniture 5,594 5,594

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Property, plant and equipment, net $ 387,069 $ 386,032

Depreciation and amortization expense for property, plant and equipment for the three months ended June 30, 2024 and 2023 was $ 4.4 million and $ 2.9 million, respectively.

Depreciation and amortization expense for property and equipment for the nine months ended June 30, 2024 and 2023 was $ 12.3 million and $ 7.4 million, respectively.

During the first quarter of fiscal 2024, the Company completed the build out of one of its laboratory and office facilities in Verona, Wisconsin, which resulted in the reclassification of $ 75.9 million from construction in progress to building as of June 30, 2024.

Further, the Company commenced depreciation on the newly completed facility over a 39-year period.

Depreciation and amortization expense for property, plant and equipment for the three months ended December 31, 2024 and 2023 was $ 4.8 million and $ 3.8 million, respectively.

During the first quarter of fiscal 2025, the Company completed the build out of its manufacturing facility in Verona, Wisconsin.

This resulted in the reclassification of $ 162.7 million from construction in progress to building and $ 2.6 million to manufacturing equipment as of December 31, 2024.

Additionally, the Company began depreciating the newly completed manufacturing facility over a 39 -year period and the manufacturing equipment over 7 - or 10 -year periods.

During the first quarter of fiscal 2024, the Company completed the build out of its laboratory and office facilities in Verona, Wisconsin, which resulted in the reclassification of $ 76.0 million from construction in progress to buildings as of December 31, 2024.

Accrued Expenses

Accrued expenses consist of the following:

June 30, 2024 September 30, 2023

December 31, 2024 September 30, 2024

(in thousands)

3 unchanged sentences

co-development

33,554 23,351

Accrued capital expenditures

2 unchanged sentences

The Company’s investments consisted of the following:

As of June 30, 2024

As of December 31, 2024

(in thousands)

11 unchanged sentences

Total current investments $ 577,465 $ 837 $ ( 26 ) $ 578,276

The Company has determined that the available-for-sale securities that were in an unrealized loss position did not have any credit loss impairment as of June 30, 2024 and 2023.

The following table summarizes the contract maturity of the available-for-sale securities as of:

December 31, 2024 September 30, 2024

(in thousands)

Within one year

$ 474,459 $ 578,276

After one to two years

$ 499,046 $ 578,276

As of December 31, 2024 and September 30, 2024, the gross unrealized losses were immaterial.

The Company has determined that the available-for-sale securities that were in an unrealized loss position did not have any credit loss impairment as of December 31, 2024 and 2023.

INTANGIBLE ASSETS

3 unchanged sentences

(in thousands) (in years)

As of June 30, 2024

As of December 31, 2024

Patents $ 21,728 $ 15,261 $ — $ 6,467 14

6 unchanged sentences

Intangible assets are reviewed annually for impairment and more frequently if potential impairment indicators exist.

No impairment indicators were identified during the nine months ended June 30, 2024 and 2023.

No impairment indicators were identified during the three months ended December 31, 2024 and 2023.

Intangible assets with definite useful lives are amortized on a straight-line basis over their useful lives.

Intangible assets amortization expense was $ 0.4 million for the three months ended June 30, 2024 and 2023, and $ 1.3 million for the nine months ended June 30, 2024 and 2023.

Intangible assets amortization expense was $ 0.4 million for the three months ended December 31, 2024 and 2023.

None of the intangible assets with definite useful lives are anticipated to have a residual value.

The following table presents the estimated future amortization expense related to intangible assets as of June 30, 2024:

The following table presents the estimated future amortization expense related to intangible assets as of December 31, 2024:

Amortization Expense

1 unchanged sentence

2025 (remainder) $ 1,275

Thereafter 1,762

2030 and thereafter 967

Total $ 8,137

3 unchanged sentences

(in thousands)

As of June 30, 2024

As of December 31, 2024

Common stock (1)

$ 0.001 290,000 125,572 125,572

Preferred stock $ 0.001 5,000 — —

2 unchanged sentences

Preferred stock $ 0.001 5,000 — —

As of June 30, 2024 and September 30, 2023, respectively, 11,608,148 and 12,709,837 shares of common stock were reserved for issuance upon exercise of options and vesting of restricted stock units granted or available for grant under the Company’s 2013 and 2021 Incentive Plans, as well as for other inducement grants made to new employees under Rule 5635(c)(4) of the Nasdaq Listing Rules.

On January 2, 2024, the Company entered into an underwriting agreement with Jefferies LLC, BofA Securities, Inc., and Cowen and Company, LLC, as representatives of the several underwriters.

The Company issued 15,790,000 shares of common stock at an offering price of $ 28.50 per share.

The aggregate purchase price paid by investors was $ 450.0 million and the Company received net proceeds of $ 429.3 million after deducting advisory fees and offering expenses.

(1) Includes shares of common stock into which the Avoro Pre-Funded Warrants may be exercised.

As of December 31, 2024 and September 30, 2024, respectively, 11,663,040 and 11,492,293 shares of common stock were reserved for issuance upon exercise of options and vesting of restricted stock units granted or available for grant under the Company’s 2013 and 2021 Incentive Plans, as well as for other inducement grants made to new employees under Rule 5635(c)(4) of the Nasdaq Listing Rules.

On November 25, 2024, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with an institutional and accredited investor for a private placement of pre-funded warrants to purchase shares of common stock with an exercise price of $ 0.001 per share (“Avoro Pre-Funded Warrants”).

Pursuant to the Securities Purchase Agreement, the Company sold pre-funded warrants to purchase up to 917,441 shares of common stock at a purchase price of $ 27.25 per pre-funded warrant, for an aggregate value of approximately $ 25.0 million.

The outstanding Avoro Pre-Funded Warrants are exercisable at any time and do not have an expiration date.

The Company determined that the Avoro Pre-Funded Warrants are freestanding financial instruments because they (i) are immediately exercisable, (ii) do not embody an obligation for the Company to repurchase its shares, (iii) permit the holders to receive a fixed number of shares of common stock upon exercise, and (iv) are indexed to the Company’s common stock.

As such, the Company evaluated the Avoro Pre-Funded Warrants to determine whether they represent instruments that require liability classification pursuant to the guidance in ASC 480.

However, the Company concluded that the Avoro Pre-Funded Warrants are not a liability within the scope of ASC 480 due to their characteristics.

Further, the Company determined that the Avoro Pre-Funded Warrants do not meet the definition of a derivative under ASC 815 because they do not meet the criteria regarding no or little initial net investment.

Accordingly, the Company assessed the Avoro Pre-Funded Warrants relative to the guidance in ASC 815-40, Contracts in Entity's Own Equity , to determine the appropriate treatment.

The Company concluded that the Avoro Pre-funded Warrants are both indexed to its own stock and meet all other conditions for equity classification.

Accordingly, the Company has classified the Avoro Pre-funded Warrants as permanent equity.

As of December 31, 2024, no shares underlying the Avoro Pre-Funded Warrants had been exercised.

In connection with the Sarepta Collaboration Agreement, on November 25, 2024, the Company entered into the Stock Purchase Agreement with an affiliate of Sarepta for a private placement of shares of common stock of the Company (the “Private Placement”).

Pursuant to the Stock Purchase Agreement, the Company sold 11,926,301 shares of common stock, at a price per share of $ 27.25 , for an aggregate value of approximately $ 325.0 million.

The Private Placement closed on February 7, 2025.

On December 2, 2022, the Company entered into an open market sale agreement (the “Open Market Sale Agreement”), pursuant to which the Company may, from time to time, sell up to $ 250,000,000 in shares of the Company’s common stock through Jefferies LLC, acting as the sales agent and/or principal, in an at-the-market offering (“ATM Offering”).

3 unchanged sentences

The Company and Jefferies may each terminate the Open Market Sale Agreement at any time upon prior notice.

As of June 30, 2024, no shares have been issued under the Open Market Sale Agreement.

As of December 31, 2024, no shares have been issued under the Open Market Sale Agreement.

COMMITMENTS AND CONTINGENCIES

1 unchanged sentence

If the potential loss from any claim, asserted or unasserted, or legal proceeding is considered probable and the amount is reasonably estimable, the Company will accrue a liability for the estimated loss.

There were no contingent liabilities recorded as of June 30, 2024.

The Company owns land in the Verona Technology Park in Verona, Wisconsin, which is being developed into an approximately 160,000 square foot drug manufacturing facility and an approximately 140,000 square foot laboratory and office facility which will support the Company’s manufacturing process development and analytical activities.

During the first quarter of fiscal 2024, the Company completed the build out of one of its laboratory and office facilities.

As of June 30, 2024, the Company has incurred $ 266.0 million and intends to spend an additional $ 18.0 million to $ 32.0 million to complete the build out of the facilities.

There were no contingent liabilities recorded as of December 31, 2024.

The Company owns land in the Verona Technology Park in Verona, Wisconsin, where it has constructed an approximately 160,000 square foot drug manufacturing facility and an approximately 140,000 square foot laboratory and office facility to support manufacturing process development and analytical activities.

As of December 31, 2024, the build-out of these facilities was completed, with total costs incurred of $ 291.2 million.

The Company has an expected outstanding balance of approximately $ 6.8 million remaining to be settled.

Pasadena, California :

2 unchanged sentences

The lease contains an option to renew for one additional five-year term.

The Company is not reasonably certain that it will exercise this option to

renew and therefore it is not included in right-of-use assets and liabilities as of June 30, 2024.

The Company is not reasonably certain that it will exercise this option to renew and therefore it is not included in right-of-use assets and liabilities as of December 31, 2024.

San Diego, California :

1 unchanged sentence

Pursuant to the lease, within twelve months of the expiration of the initial 15 -year term, the Company has the option to extend the lease for up to one additional ten-year term, with certain annual increases in base rent.

The Company is not reasonably certain that it will exercise this option to renew and therefore it is not included in right-of-use assets and liabilities as of June 30, 2024.

The lease agreement grants the Company the right to receive an Additional Tenant Improvement Allowance (“ATIA”) funded by the lessor, with a maximum amount of $ 7.2 million, subject to a 7 % interest per annum over the base term.

Further, on September 25, 2023, the Company executed the first amendment to the lease, which grants a second ATIA with a maximum amount of $ 23.6 million, bearing interest at a rate of 9 % per annum over the base term.

The Company received $ 30.8 million ATIA from the lessor during the first quarter of fiscal 2024.

The Company is not reasonably certain that it will exercise this option to renew and therefore it is not included in right-of-use assets and liabilities as of December 31, 2024.

The lease agreement, as amended, granted the Company the right to receive an Additional Tenant Improvement Allowance (“ATIA”) funded by the lessor.

The Company received $ 30.8 million in ATIA, including a final payment of $ 3.1 million during the first quarter of fiscal 2024.

As a result, the Company remeasured its lease liability and right-of-use assets to reflect these additional allowances and the related increased lease payments.

The Company has further concluded that these ATIAs have no effects on the classification of the lease.

The Company previously subleased additional research and development space in San Diego, California, which sublease ended during the fiscal year of 2023.

Madison, Wisconsin :

1 unchanged sentence

The lease contains options to renew for two terms of five years .

The Company is not reasonably certain that it will exercise this option and therefore it is not included in right-of-use assets and liabilities as of June 30, 2024.

The Company is not reasonably certain that it will exercise this option and therefore it is not included in right-of-use assets and liabilities as of December 31, 2024.

The components of lease assets and liabilities along with their classification on the Company’s consolidated balance sheets were as follows:

Lease Assets and Liabilities Classification June 30, 2024 September 30, 2023

Lease Assets and Liabilities Classification December 31, 2024 September 30, 2024

(in thousands)

2 unchanged sentences

Non-current operating lease liabilities Lease liabilities, net of current portion 109,296 111,027

Three Months Ended June 30, Nine Months Ended June 30,

Three Months Ended December 31,

Lease Cost Classification 2024 2023

7 unchanged sentences

(1) Variable lease cost is primarily related to operating expenses associated with the Company’s operating leases.

There was no short-term lease cost during the nine months ended June 30, 2024.

There was $ 0.6 million and $ 1.2 million short-term lease cost during the three and nine months ended June 30, 2023, respectively.

The following table presents maturities of operating lease liabilities on an undiscounted basis as of June 30, 2024:

There was $ 0 short-term lease cost during the three months ended December 31, 2024 and 2023, respectively.

The following table presents maturities of operating lease liabilities on an undiscounted basis as of December 31, 2024:

(in thousands)

5 unchanged sentences

Supplemental cash flow and other information related to leases was as follows:

Three Months Ended June 30, Nine Months Ended June 30,

2024 2023 2024 2023

(in thousands)

Three Months Ended December 31,

Cash received for amounts included in the measurement of lease liabilities:

1 unchanged sentence

Right-of-use assets adjusted in exchange for new/amended operating lease liabilities $ — $ 64

$ — $ 3,519 $ ( 64 ) $ ( 19,063 )

Cash paid for amounts included in the measurement of lease liabilities:

3 unchanged sentences

STOCK-BASED COMPENSATION

The Company has two plans that provide for equity-based compensation under the 2013 and the 2021 plans.

Under the 2013 Incentive Plan (the “2013 Plan”), 2,924,586 shares of the Company’s common stock are reserved for grants of stock options and restricted stock awards to employees and directors as of June 30, 2024.

The Company has three plans that provide for equity-based compensation.

Under the 2013 Incentive Plan (the “2013 Plan”), 2,855,923 shares of the Company’s common stock are reserved for grants of stock options and restricted stock awards to employees and directors as of December 31, 2024.

Under the 2021 Incentive Plan (the “2021 Plan”), 8,000,000 shares (subject to certain adjustments) of the Company’s common stock are reserved for grants of stock options, stock appreciation rights, restricted and unrestricted stock, performance awards, cash awards and other awards convertible into or otherwise based on shares of the Company’s common stock.

The maximum number of shares authorized under the 2021 Plan will be (i) reduced by any shares subject to awards made under the 2013 Plan after January 1, 2021, and (ii) increased by any shares subject to outstanding awards under the 2013 Plan as of January 1, 2021 that, after January 1, 2021, are canceled, expired, forfeited or otherwise not issued under such awards (other than as a result of being tendered or withheld to pay the exercise price or withholding taxes in connection with any such awards) or settled in cash.

As of June 30, 2024, the total number of shares available for issuance was 4,565,727 shares, which includes 158,928 and 154,139 shares that were forfeited under the 2013 and 2021 Plans, respectively, and 3,697,189 shares have been granted under the 2021 Plan.

In addition, there were 665,020 shares reserved for options and 616,638 shares reserved for restricted stock units issued as inducement grants to new employees granted outside of the Company’s equity-based compensation plans under Rule 5635(c)(4) of the Nasdaq Listing Rules.

The following table presents a summary of awards outstanding:

As of June 30, 2024

under the 2013 Plan as of January 1, 2021 that, after January 1, 2021, are canceled, expired, forfeited or otherwise not issued under such awards (other than as a result of being tendered or withheld to pay the exercise price or withholding taxes in connection with any such awards) or settled in cash.

As of December 31, 2024, the total number of shares available for issuance was 4,262,537 shares, which includes 161,085 and 277,690 shares that were forfeited under the 2013 and 2021 Plans, respectively, and 4,176,238 shares have been granted under the 2021 Plan.

Under the Company ’ s Inducement Plan (the “Inducement Plan”), 832,950 shares of the Company’s common stock are authorized for issuance pursuant to grants of stock options, stock appreciation rights, restricted and unrestricted stock, stock units (including restricted stock units), performance awards, cash awards, and other awards convertible into or otherwise based on shares of the Company’s common stock.

Awards under the Inducement Plan may only be granted to new employees of the Company in accordance with the provisions of Rule 5635(c)(4) of the Nasdaq Listing Rules.

As of December 31, 2024, the total number of shares remaining available for issuance was 453,601 shares, and 428,800 shares have been granted under the Inducement Plan.

In addition, prior to adoption of the Inducement Plan, the Company previously granted stand-alone inducement awards in the form of stock options and restricted stock units outside of the Company ’ s equity plans to new employees under Rule 5635(c)(4) of the Nasdaq Listing Rules.

As of December 31, 2024, there were 602,939 and 183,750 shares underlying outstanding stand-alone inducement options and restricted stock units, respectively.

The following table presents a summary of awards outstanding attributable to Arrowhead Pharmaceuticals, Inc.:

As of December 31, 2024

2013 Plan 2021 Plan Inducement Awards Total

4 unchanged sentences

The following table summarizes stock-based compensation expenses included in operating expenses:

Three Months Ended June 30, Nine Months Ended June 30,

2024 2023 2024 2023

Three Months Ended December 31,

(in thousands)

Research and development $ 6,846 $ 7,823

2 unchanged sentences

Stock Option Awards

The following table presents a summary of the stock option activity for the nine months ended June 30, 2024:

The following table presents a summary of the stock option activity for the three months ended December 31, 2024:

Shares Weighted-

5 unchanged sentences

Exercised ( 69,506 ) 9.06

Outstanding at June 30, 2024

Outstanding at December 31, 2024

1,883,128 $ 23.69 3.3 $ 12,408,737

Exercisable at June 30, 2024

Exercisable at December 31, 2024

1,882,710 $ 23.68 3.3 $ 12,408,737

The aggregate intrinsic values represent the amount by which the market price of the underlying stock exceeds the

exercise price of the option.

The total intrinsic value of the options exercised during the three months ended June 30, 2024 and 2023 was $ 0.7 million and $ 6.5 million, respectively.

The total intrinsic value of the options exercised during the nine months ended June 30, 2024 and 2023 was $ 3.8 million and $ 10.1 million, respectively.

Stock-based compensation expense related to stock options outstanding for the three months ended June 30, 2024 and 2023, was $ 0.4 million and $ 2.1 million, respectively.

Stock-based compensation expense related to stock options outstanding for the nine months ended June 30, 2024 and 2023, was $ 2.5 million and $ 6.7 million, respectively.

As of June 30, 2024, the pre-tax compensation expense for all outstanding unvested stock options in the amount of $ 0.4 million will be recognized in the Company’s results of operations over a weighted average period of 3 months.

The aggregate intrinsic values represent the amount by which the market price of the underlying stock exceeds the exercise price of the option.

The total intrinsic value of the options exercised during the three months ended December 31, 2024 and 2023 was $ 0.9 million and $ 0.6 million, respectively.

Stock-based compensation expense related to stock options outstanding for the three months ended December 31, 2024 and 2023, was $ 0.1 million and $ 1.5 million, respectively.

As of December 31, 2024, the pre-tax compensation expense for all outstanding unvested stock options is considered nominal and will be recognized in the Company’s results of operations over a weighted average period of 4 days.

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model.

2 unchanged sentences

Because the Company’s employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.

The following table provides the assumptions used in the calculation of grant-date fair values of these stock options based on the Black-Scholes option pricing model:

Nine Months Ended June 30,

Expected dividend yield (1)

Risk-free interest rate (2)

Expected volatility (3)

Expected term (in years) (4)

Weighted average grant date fair value per share of options granted N/A $ 24.80

(1) The dividend yield is zero as the Company currently does not pay a dividend.

(2) The risk-free interest rate is based on that of the U.S.

Treasury yields with equivalent terms in effect at the time of the grant.

(3) Volatility is estimated based on volatility average of the Company’s common stock price.

(4) The computation of expected term was determined based on safe harbor rules, considering the contractual terms of the awards and vesting schedules.

(5) No options were granted during the nine months ended June 30, 2024.

No options were granted during the three months ended December 31, 2024 and 2023.

Visirna ESOP :

1 unchanged sentence

The Visirna ESOP is independently managed by Visirna, including the valuation process.

For the three and nine months ended June 30, 2024, stock-based compensation expense related to the Visirna ESOP was $ 2.3 million and $ 5.5 million, respectively.

For the three months ended December 31, 2024 and 2023, stock-based compensation expense related to the Visirna ESOP was $ 1.0 million and $ 2.0 million, respectively.

Restricted Stock Units

Restricted Stock Units (“RSUs”), including market-based, time-based and performance-based awards, have been granted under the Company’s 2013 and 2021 Plans and as inducements grants granted outside of the Company’s equity-based compensation plans.

Restricted Stock Units (“RSUs”), including market-based, time-based and performance-based awards, have been granted under the Company’s 2013 and 2021 Plans, the Inducement Plan, and as inducements awards granted outside of the Company’s equity-based compensation plans.

At vesting, each outstanding RSU will be exchanged for one share of the Company’s common stock.

7 unchanged sentences

Forfeited ( 133,564 ) 35.12

Outstanding at June 30, 2024

Outstanding at December 31, 2024

5,063,774 $ 46.58

The fair value of RSUs was determined based on the closing price of the Company’s common stock on the grant date, with consideration given to the probability of achieving service and/or performance conditions for awards.

For the three months ended June 30, 2024 and 2023, the Company recorded $ 14.3 million and $ 17.8 million of expense related to RSUs, respectively.

For the nine months ended June 30, 2024 and 2023, the Company recorded $ 46.5 million and $ 53.2 million of expense related to RSUs, respectively.

As of June 30, 2024, there was $ 96.3 million of total unrecognized compensation cost related to RSUs that is expected to be recognized over a weighted-average period of 1.6 years.

For the three months ended December 31, 2024 and 2023, the Company recorded $ 14.1 million and $ 16.2 million of expense related to RSUs, respectively.

As of December 31, 2024, there was $ 75.3 million of total unrecognized compensation cost related to RSUs that is expected to be recognized over a weighted-average period of 1.5 years.

FAIR VALUE MEASUREMENTS

5 unchanged sentences

This condition could cause an instrument to be reclassified from Level 1 to Level 2, or from Level 2 to Level 3.

The Company recognizes transfers between levels at either the actual date of the event or a change in circumstances that caused the transfer.

At June 30, 2024 and September 30, 2023, the Company did not have any financial assets or financial liabilities based on Level 3 measurements.

The Company recognizes transfers between levels at either the actual date of the event or a change in circumstances that caused

the transfer.

As of December 31, 2024 and September 30, 2024, the Company did not have any financial assets or financial liabilities based on Level 3 measurements.

The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis, and indicates the fair value hierarchy of the valuation techniques utilized by the Company:

June 30, 2024

December 31, 2024

Level 1 Level 2 Level 3 Total

1 unchanged sentence

Available-for-sale securities

government bonds $ — $ 80,946 $ — $ 80,946

government and agency securities $ — $ 135,718 $ — $ 135,718

Commercial notes — 136,944 — 136,944

10 unchanged sentences

Available-for-sale securities

government bonds $ 31,553 $ — $ — $ 31,553

Municipal securities — 7,093 — 7,093

government and agency securities $ — $ 160,723 $ — $ 160,723

Commercial notes — 179,714 — 179,714

7 unchanged sentences

LIABILITY RELATED TO THE SALE OF FUTURE ROYALTIES

In November 2022, the Company and Royalty Pharma entered into the Royalty Pharma Agreement, pursuant to which Royalty Pharma agreed to pay up to $ 410.0 million in cash to the Company in consideration for the Company’s future royalty interest in olpasiran, a siRNA originally developed by the Company and licensed to Amgen in September 2016 under the Olpasiran Agreement.

Pursuant to the Royalty Pharma Agreement, Royalty Pharma paid $ 250.0 million upfront and agreed to pay up to an

additional $ 160.0 million in aggregate one-time milestone payments due if and when the following milestone events occur:

In November 2022, the Company and Royalty Pharma entered into the Royalty Pharma Agreement, pursuant to which Royalty Pharma agreed to pay up to $ 410.0 million in cash to the Company in consideration for the Company’s future royalty interest in olpasiran, originally developed by the Company and licensed to Amgen in September 2016 under the Olpasiran Agreement.

Pursuant to the Royalty Pharma Agreement, Royalty Pharma paid $ 250.0 million upfront and agreed to pay up to an additional $ 160.0 million in aggregate one-time milestone payments due if and when the following milestone events occur:

(i) $ 50.0 million on completion of enrollment in the OCEAN Phase 3 clinical trial for olpasiran, (ii) $ 50.0 million upon receipt of FDA approval of olpasiran for an approved indication (reduction in the risk of myocardial infarction, urgent coronary revascularization, or coronary heart disease death in adults with established cardiovascular disease and elevated Lp(a)), and (iii) $ 60.0 million upon Royalty Pharma’s receipt of at least $ 70.0 million of royalty payments under the Royalty Pharma Agreement in any single calendar year.

1 unchanged sentence

In consideration for the payment of the foregoing amounts under the Royalty Pharma Agreement, Royalty Pharma is entitled to receive all royalties otherwise payable by Amgen to the Company under the Olpasiran Agreement.

The Company remains eligible to receive any milestone payments potentially payable by Amgen under the Olpasiran Agreement.

The Company remains eligible to receive any milestone payments potentially payable by Amgen under the Olpasiran

The Company has evaluated the terms of the Royalty Pharma Agreement and concluded, in accordance with the relevant accounting guidance, that the Company accounted for the transaction as debt and the funding of $ 250.0 million and $ 50.0 million from Royalty Pharma were recorded as liabilities related to the sale of future royalties on its consolidated balance sheets.

7 unchanged sentences

To the extent such payments are greater or less than the Company’s initial estimates or the timing of such payments is different than its original estimates, the Company will prospectively adjust the amortization of the royalty financing obligations and the effective interest rate.

As of June 30, 2024, the estimated effective interest rate was 6.3 %.

As of December 31, 2024, the estimated effective interest rate was 6.3 %.

The following table presents the activity with respect to the liability related to the sale of future royalties.

Carrying Amount

December 31, 2024 September 30, 2024

(in thousands)

Carrying value as of September 30, 2023 $ 268,326

Beginning carrying value

$ 341,361 $ 268,326

Milestone payment received

Non-cash interest expense recognized 5,415 23,035

Carrying value as of June 30, 2024 $ 336,031

NET LOSS PER SHARE

The following table presents the computation of basic and diluted net loss per share for the three and nine months ended June 30, 2024 and 2023.

Three Months Ended June 30, Nine Months Ended June 30,

Ending carrying value

$ 346,776 $ 341,361

FINANCING AGREEMENT

On August 7, 2024 (the “Closing Date”), the Company entered into the Financing Agreement with the guarantors party thereto, the lenders party thereto (the “Lenders”), and Sixth Street Lending Partners (“Sixth Street”), as the administrative agent and collateral agent for the Lenders.

The Financing Agreement establishes a senior secured term loan facility of $ 500.0 million (the “Credit Facility”), consisting of $ 400.0 million funded on the Closing Date and an additional $ 100.0 million available at the Company’s option, subject to mutual agreement with Sixth Street, over the seven-year term.

The outstanding principal balance of this Credit Facility, along with the accrued but unpaid interest, is due and payable on August 7, 2031 and bears interest at an annual rate of 15.0 %.

On the Closing Date, the Company received net proceeds of $ 390.7 million, after issuance costs.

Additional fees related to third parties have been paid as of December 31, 2024.

The Company is permitted to use the net proceeds for working capital, capital expenditures and general corporate purposes of the Company and its subsidiaries.

The Company will have the right to prepay loans under the Credit Facility at any time.

The Company is required to partially repay loans under the Credit Facility with proceeds from certain asset sales, condemnation events and extraordinary receipts, subject, in some cases, to reinvestment rights.

If the Company repays in full the aggregate principal outstanding under the Credit Facility and such payment in full occurs on or prior to August 7, 2028, the Company will be required to make an additional payment to the lenders under the Credit Facility on such date in an amount necessary for the lenders to achieve a multiple of two times on invested capital of the aggregate principal amount funded on the Closing Date.

If such payment in full occurs after August 7, 2028, the Company will be required to make an additional payment to the lenders under the Credit Facility on such date in an amount necessary for the lenders to achieve the greater of the multiple of two times on invested capital of the aggregate principal amount funded on the Closing Date and the present value of all interest payments that would have been payable from such date through the maturity date of the Credit Facility.

On November 26, 2024, the Company entered into an amendment to the Financing Agreement to modify, amongst other things, the requirements to make prepayments of the loans under the Credit Facility with respect to certain transactions.

The Company paid $ 1.6 million during the second quarter of fiscal 2025, representing 65 % of the milestone payments from GSK under the Credit Facility term.

All obligations under the Financing Agreement will be secured on a first-priority basis, subject to certain exceptions, by security interests in substantially all assets of the Company and material subsidiaries of the Company, including its

intellectual property, and will be guaranteed by material subsidiaries of the Company, including foreign subsidiaries, subject to certain exceptions.

The Financing Agreement contains customary covenants, including, without limitation, a financial covenant to maintain liquidity (cash, cash equivalents and investments) of at least $ 100.0 million if the Company ’ s market capitalization is above $ 1.5 billion, and negative covenants that, subject to certain exceptions, restrict indebtedness, liens, investments (including acquisitions), fundamental changes, asset sales and licensing transactions, dividends, modifications to material agreements, payment of subordinated indebtedness, and other matters customarily restricted in such agreements.

The Company is subject to restrictions on sales and licensing transactions with respect to certain core intellectual property, subject to certain exceptions, including certain transactions related to areas outside the United States, United Kingdom, European Union, Japan and China.

The Financing Agreement contains certain embedded features that were identified and evaluated as not material to the consolidated financial statements.

The outstanding balance of the Credit Facility consisted of the following:

December 31, 2024 September 30, 2024

(in thousands)

Initial Term Loan $ 400,000 $ 400,000

Accumulated interest on the Initial Term Loan 24,678 9,000

Unamortized debt discount and issuance costs ( 15,264 ) ( 15,817 )

Current portion of credit facility ( 1,625 ) $ —

Credit facility, net of current portion $ 407,789 $ 393,183

The following table sets forth total interest expense recognized related to the Credit Facility:

Three Months Ended December 31,

(in thousands)

Amortization of debt discount and issuance costs

Contractual interest expense

Total interest expense

NET LOSS PER SHARE

The following table presents the computation of basic and diluted net loss per share.

Three Months Ended December 31,

(in thousands, except per share amounts)

2 unchanged sentences

Weighted-average basic shares outstanding (1)

124,848 107,415

Effect of dilutive securities — —

Weighted-average diluted shares outstanding (1)

124,848 107,415

Basic net loss per share $ ( 1.39 ) $ ( 1.24 )

Diluted net loss per share $ ( 1.39 ) $ ( 1.24 )

The following table sets forth the potentially dilutive securities that have been excluded from the calculation of diluted net loss per share because to include them would be anti-dilutive.

Three Months Ended June 30, Nine Months Ended June 30,

2024 2023 2024 2023

(1) Includes shares of common stock into which the Avoro Pre-Funded Warrants may be exercised.

The following table sets forth the potentially dilutive securities that have been excluded from the calculation of

diluted net loss per share because to include them would be anti-dilutive.

Three Months Ended December 31,

(in thousands)

3 unchanged sentences

SUBSEQUENT EVENTS

Financing Agreement

On August 7, 2024 (the “Closing Date”), the Company entered into a financing agreement (the “Financing Agreement”) with the guarantors party thereto, the lenders party thereto (the “Lenders”), and Sixth Street Lending Partners, as the administrative agent and collateral agent for the Lenders.

The Financing Agreement provides for a senior secured term loan facility of $ 500.0 million (the “Credit Facility”), which includes $ 400.0 million funded on the Closing Date with an additional $ 100.0 million at the Company’s option, subject to mutual agreement between Sixth Street and the Company, during the seven-year term of the agreement.

The Credit Facility matures on August 7, 2031 (the “Maturity Date”) and bears interest at an annual rate equal to 15.0 %.

The Credit Facility does not provide for scheduled amortization payments during the term, and all principal will be due on the Maturity Date.

The Company has the right to prepay loans under the Financing Agreement at any time.

Other Information of Part II, for more information.

As previously disclosed, on November 25, 2024, the Company and Sarepta entered into the Sarepta Collaboration Agreement for the co-development and commercialization of multiple clinical and preclinical programs in rare, genetic diseases of the muscle, central nervous system, and lungs.

The Company also entered into a Stock Purchase Agreement with an affiliate of Sarepta for a private placement of shares of common stock of the Company.

On February 7, 2025, after receipt of clearance under the Hart-Scott Rodino Antitrust Improvements Act, the transactions contemplated by the Sarepta Collaboration Agreement and the Stock Purchase Agreement closed.

Upon closing, the Company received $ 325.0 million for the purchase of 11,926,301 shares of common stock, at a price per share of $ 27.25 and will receive $ 500.0 million as an upfront payment under the Sarepta Collaboration Agreement.

The Company and an affiliate of Sarepta also entered into the previously-disclosed Investor Rights Agreement at closing.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements